Trump agency says to ignore judicial orders in New York, Michigan, Connecticut, California
The Commodity Futures Trading Commission has issued an interpretation directing designated contract markets and prediction market platforms to cease domestic geographic restrictions within 30 days, or else submit an explanation to the Division of Market Oversight as to why compliance is not feasible.
Legal experts predict the clash could trigger a series of court challenges, potentially forcing the judiciary to clarify the balance of federal versus state authority over derivatives and prediction markets. Industry stakeholders are closely monitoring the situation, weighing compliance risks against possible legal repercussions.
The mandate, driven by CFTC Chairman Michael S. Selig, asserts that Commission Regulation 38.151(b) on impartial access requirements means federally regulated derivatives markets must function nationally.
According to the agency, blocking participants by state weakens fair and open competition and creates an unworkable patchwork of geographic barriers.
However, the directive immediately puts federal regulators on a collision course with state-level rulings and court ordersāincluding actions in states like New York, Michigan, Connecticut, and a recent federal injunction involving California tribesāthat previously required platforms to āgeofenceā or block sports-related event contracts that local authorities consider illegal gambling.
Consumer groups and watchdogs have sharply criticized the move. Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued a statement arguing that the CFTC is unlawfully instructing private financial firms to defy active judicial orders.
āUnder Chair (Mike) Selig, the CFTC has demonstrated that its priority is giving crypto companies and prediction markets anything they want rather than doing its job of regulating the derivatives markets,ā Schiffrin said, calling the directive an unprecedented escalation of regulatory conflict.
The order leaves prediction market platforms like Kalshi caught between conflicting authorities: federal directives requiring national access and state-level court commands demanding regional geofencing. Exchanges now have 30 days either to remove domestic restrictions or formally explain to the agency why compliance remains unfeasible.
Selig is the youngest CFTC Chairman in history, at 36 years old, but he has a history of ethical conflicts as a corporate lawyer for cryptocurrency firms and prediction markets, and previously served as chief counsel of the SECās Crypto Task Force.
Prediction market critics like Rep. Alexandria Ocasio-Cortez and former New Jersey Gov. Chris Christie, who likened him to āa cowboy,ā say Seligās agency is locking horns with states, lawmakers, and potential 2028 presidential contenders.
The Wall Street regulator contends that the Commodity Futures Trading Commission should be the exclusive overseer of emerging prediction market platforms like Kalshi and Polymarket U.S., as they operate as federally regulated financial exchanges.
However, critics argue that these platforms are fundamentally gambling operations and should be subject to state-level regulation.
The unfolding standoff between the CFTC and state authorities highlights a growing tension as the Trump administration pushes financial deregulation, raising new questions about federal oversight and conflicting with state sovereignty.
Market participants and legal analysts are watching closely to see how courts respond and whether platforms can navigate these conflicting mandates without facing penalties that could criple the future of emerging prediction markets.
āThis industry is raking in several billion dollars in weekly trading volumes, and its growth has come in part thanks to President Donald Trumpās reckless regulatory policies that allow greedy corporate raiders to gouge customers,ā said New Jersey consumer advocate Lisa McCormick.
Newly created Polymarket accounts earned hundreds of thousands of dollars by placing precise, well-timed bets on a U.S.āIran ceasefire just hours before it was unexpectedly announced on April 7, despite Donald Trumpās sharp escalation of rhetoric and threats of destruction earlier that day.
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